The United States Labor board is reporting, today, that the Philadelphia sports theme bar and restaurant chain, Chickie’s and Pete’s(www.chickiesandpetes.com) have agreed to a judgment of $6.8 million in back wages to former and current employees. The back wages are to be paid to employees due to the improper taking of tips, for violating overtime and record keeping requirements. This was one of the largest tipped employees’ investigations, according to the Department of Labor. In addition to paying $6,842,412 to 1,159 employees in 9 different locations a $50,000 fine. The consent judgment had been filed in the United States District Court for the Eastern District of Pennsylvania but it is subject to approval by the court.
A press release from the Labor Board, (http://www.dol.gov/opa/media/press/whd/WHD20140044.htm) states that “"The egregious actions by Chickie's & Pete's harmed real people and violated the promise that a fair day's work deserves a fair day's pay," said U.S. Secretary of Labor Thomas E. Perez. Restaurant servers are among the lowest paid workers in this country, with many earning incomes below the poverty line. Tipped workers deserve better and this action shows that the Department of Labor is ready to stand up for them."
The cause of the investigation was that the company requires servers to contribute a portion of their tips to a “tip pool” or tip sharing arrangement. The restaurant chain also required that the owner illegally retain 60 percent of the server’s tips and this amount had the nickname of “Pete’s Tax”. The cash was then paid to the manager at the end of the shift. If the employee had credit card receipts they were to require to pony up the cash portion of the credit card receipt. Employees, at times, had to take cash out of their own ATM accounts or even borrow the funds from other employees. In addition to these violations, Chickie’s and Pete’s, failed to pay the required overtime wages for these employees when they worked in excess of 40 hours in a week. Investigators also determined that employees were not paid for time spent in mandatory meetings and training, and were improperly required to pay for uniforms. Separately, the restaurant announced it would spend nearly $1.7 million to settle private lawsuits with about 90 other employees who alleged unfair pay practices.
Chickie’s and Pete’s issued a statement, from the owners, in which owner Pat Ciarrocchi Jr, "Our employees is the backbone of our company, and they deserve our respect and appreciation” and that “"We believe these settlements are in their best interests."
The consent judgment filed yesterday also will participate in internal and external compliance monitoring for 18 months, will train employees about their rights under the Fair Labor and Standard’s Act. The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular rates of pay for hours worked beyond 40 per week. Employers also are required to provide employees notice about the FLSA tip credit provisions, to maintain accurate time and payroll records and to comply with the hours, hazardous orders and other restrictions applying to workers under age 18.
Additionally, servers and bartenders were paid only a flat rate of $15 per shift at all locations except for Chickie's and Pete's airport establishment — an amount that was not sufficient in all cases to even cover the minimum cash wage of $2.13 per hour that must be paid to a tipped employee when an employer claims a tip credit under federal law. Additionally, the employer failed to pay the required overtime wages for these employees when they worked in excess of 40 hours in a week. Investigators also determined that employees were not paid for time spent in mandatory meetings and training, and were improperly required to pay for uniforms.